Title: Skydance Media Considers Walking Away from Paramount Global Deal Amidst Competing Offers
Introduction:
Skydance Media, led by David Ellison and backed by RedBird Capital and KKR, is contemplating withdrawing its offer to acquire Paramount Global unless it receives a firm commitment from controlling shareholder Shari Redstone. This decision comes in response to the latest bid from Apollo Global Management and Sony Pictures. Paramount’s special committee is currently evaluating the Apollo-Sony offer, while the exclusivity window for discussions with Skydance ends soon.
Skydance’s Ultimatum:
According to an insider, Skydance Media is not willing to serve as a stalking horse offer for Apollo and Sony. The consortium is seeking reassurance from Shari Redstone that she remains committed to their deal. However, depending on Redstone’s response, David Ellison may still be open to collaborating with her. This uncertainty adds a new layer of complexity to the negotiations.
Apollo-Sony Offer:
Apollo Global Management and Sony Pictures have formally expressed their interest in acquiring Paramount for approximately $26 billion. As the special committee evaluates this bid, Paramount’s shares have experienced a surge in value. The committee’s recommendation to Redstone will heavily influence the future of the deal.
Redstone’s Potential Role:
As part of Skydance’s revised offer, Shari Redstone may receive less than $2 billion for her controlling stake in Paramount. This amount is lower than what was initially proposed by Skydance. However, the consortium plans to contribute additional capital to compensate common and Class B shareholders at a nearly 30% premium to the undisturbed trading price. Redstone and Skydance together would contribute $3 billion, primarily benefiting Class B shareholders.
Skydance’s Valuation:
The valuation of Skydance Media as part of the deal remains around $5 billion. It is unclear if the Apollo-Sony offer includes the same premium for Redstone. Skydance’s initial offer was preferred by Redstone as it aimed to keep Paramount intact. Conversely, a private equity firm is likely to consider breaking up the company.
Conclusion:
The fate of the Paramount Global deal hangs in the balance as Skydance Media contemplates walking away amidst competition from Apollo Global Management and Sony Pictures. The special committee’s recommendation and Shari Redstone’s response will play crucial roles in determining the future of the acquisition. Both parties are vying for Redstone’s commitment, with Skydance revising its offer to accommodate Class B shareholders. As negotiations unfold, the entertainment industry eagerly awaits the outcome of these high-stakes discussions.
